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on cnbc. see you tomorrow. >> good evening everyone ine larry kudlow, this is, "the kudlow report". here is another tip i have for the gop. president obama will compromise. so you can raise the debt ceiling and cut spending and you can get all that done if you play your cards right. but what is the conservative advice for the republican party for the long run? what does the gop need to do to change it's message? and wheel ask pennsylvania governor comcore bet, we'll find out why people from virginia to maryland to new jersey are moving to his state and what

will lance armstrong's doping admissions cost him. the lawsuits are already piling up. and possible criminal prosecution. but here is another question. could armstrong go to jail? the kudlow report begins right now. >> here is my quick take on his debt ceiling stand off. do not mess with the credit rating with the united states of america. however, you can race the debt ceiling and cut spending at the same time. on top of that, you kcan fix th $2 trillion situation. that is my take.

charlie wrangle from new york and i begin with you. i don't understand why that can't be done. you can get that done. you are one of my buddies, but i object to you using the default. you have enough cash flow and the vast majority. i hate that argument. i know. but it is wrong to call it default. >> why not avoid default all together. because i believe it distorts the rest of the debate the good congressman and i need to have. >> cutti inting spending, i don want to get hung up on default.

it is all bad. welcome back, sir, why can't we have our cake and eat it too? why can't we compromise with spending cuts at the same time too? >> we can do it as long as we recognize it is apples and oranges. our obligation has nothing to do with our inability to govern our own spending and taxes. but anytime one tries to hold it, that is when it is wrong. whatever you want to call it, when you have a moral and constitutional obligation you shouldn't mix it up with things you want to do politically. i come back to you, there is the

see quester that was done in late 2011. and on top of that, we have to have a continuing resolution to let the government run. my suggestion is that you give yourself time to get that done. >> maybe we can rise beyond some of our constituentsys which are screaming in our ears don't compromise. >> maybe you can change the order that these fall. if you want to line up where you are spendingwise. but i have to disagree with my buddy charlie and i think the moral obligation here and the way that you keep us from being downgraded how do we tell the markets that we are doing

something to tell the debt curve what it is about to do to the country. >> if it looks like you are trying to parcel out, there are 80 million payment accounts in the american government and you are rying to give out who has what, then you are rying to debt downgrade. >> if we are talking about concurrent resolutions and people are screaming don't compromise then we are dealing with a political situation. that is why we were elected. but when you start talking about a constitution al mandate, you should not mix apples and oranges and get your politics mixed up with the budget. what i mean is that it has nothing to do with our future

spending at all. what we have done is made a moral commitment. that should not be tainted with our ability to pay as we go or to cut back spend iing. real issues. >> if you want to deal with the struggle. when you want to consider the medicare trust fund we have 38 months left and something you might find interesting as a thought exercise. how many of our you viewers are demanding and want a balanced budget? you realize the date after you pass the borrowing authority, it is time to start understanding when you borrow 40 cents on

every cent that you spend, where does that lead you? >> as long as you lead the constitutional obligations out of this debate, then we can move on. right up until the resolution date. >> i'm saying the constitution says nobody shall impede the president's obligation. >> i'll leave that alone. i just want to quote. i'm not a constitutional scholar. the validity of the united states shall not be questioned. it had nothing to do with raising and lowering the debt.

all money bills should begin in the house. it is wonderful to see you thank you for helping us. >> here now we have mark hanna. >> guy benson, town hall.com political editor. lis inning to these chaps talk. i believe the debt increase is not only about the past and i think that we have a right to know what the budgets about the white house and the senate and the house are going to be. right now we don't have any budgets at all. i think ha is exactly right. this is a sep at that has not passed the budget in four years. what sort of bills they are planning to pay and the question

here the real question is how do we prevent this from happening again. this is a recurring crisis. we have done this already under entitlements. >> that is the big question. will president obama compromise? >> i'm not sure he is going to compromise on this debt ceiling fight. it is important to talk about the broader contours of this actual debate. a year and a half ago we had an increase of 1 $2.1 trillion. and we are through that. and now we are up to $17 trillion. so, in my view to be candid. there is only one party that is

remotely serious about dealing with this party. if we are talking tactics, what do you do if you are house republicans? you have leverage. you have talked about them already on this show. one of them is the debt ceiling fight. and the final one is the continuing resolution which is the stop gap thing because we haven't had a budget for four years. i agree with you. i think the president has the high ground there. he has a big weapon in his arsenal there. you have to give the president his way on that. >> if you pay the debt but you have to apportion out the money, the term for that is default. >> mark, my basic view is this is going to get done. but i'd like to move the last

minute further out. if these guys need three to six months to do it up right and get a compromise. i'm willing to give them four to six months extra time. >> settling a debt ceiling issue is in the interest of the president and of our country. you have today fitch came out and threatened to decrease the credit rating and they are doing it in a way that areckless because you have outside observers looking at us and i want to highlight a point you made earlier which is the fact that all spending bills are in the constitution. we are looking at a credit card bill that this country has to pay that was in cured by

congress by authorizing this spending. >> but peter, you are going to get a budget out of that house. they are late, but i believe they will. it is the senate that hasn't delivered a budge it in years. this is not just about the here and now. this is forward spending. forward spending needs a road map and the taxpayers have a right to know. >> yeah, i think it is pretty rich to call republican ares reckless spepder e spenders her. when president obama was asked to vote on a hike in 2006, the fact that we are raising the debt limit is a result of

reckless fiscal policies and that is what president obama says. >> but didn't it explode under president obama? >> it exploded further. >> peter this is an important point. the deficit isn't the product of spending. the economic down turn has left americans making less money in terms of spending. >> we spend each year more than we brought in. >> spending and revenue. our revenue has decreased and american -- >> i got to go. >> i got to go. >> spending budgets they have gone up under president obama and have held at $3.5 billion each year. >> i got to go. we can continue it another time.

>> but it is also economic growth which it self might be a function of taxes and spending. if this economy were growing, you would have a substantially lower budget deficit. gentlemen we will welcome you back another time. >> there is at least one state in the northeast that gets it. natural gas shale and it is pennsylvania and the republican governor tom corebet is about to join us. he picks up support from chuck schumer who didn't get an apology for the anti-israel statements. if we were growing at 5% instead

of 2% we would be close to a balanced budget today. i'm kudlow we will be right back. at 1:45, the aflac duck was brought in

with multiple lacerations to the wing and a fractured beak. surgery was successful, but he will be in a cast until it is fully healed, possibly several months. so, if the duck isn't able to work, how will he pay for his living expenses? aflac. like his rent and car payments? aflac. what about gas and groceries? aflac. cell phone? aflac, but i doubt he'll be using his phone for quite a while cause like i said, he has a fractured beak. [ male announcer ] send the aflac duck a get-well card at getwellduck.com.

here is the governor who gets the job joining me now pennsylvania republican governor welcome to the kudlow report sir. let me get this right, why are these cars with maryland and jersey plates moving into pennsylvania? >> thank you for having me on. i think a lot of it has to do with keeping it in line to not race taxes and create jobs. we have created 108,000 private sector jobs. as a result of the shale that we have here, and our economy is a little more attractive to businesses not just from new jersey and from maryland, but from around the country and the world that are looking at pennsylvania and what we can do with our cheap energy, our great

workforce and our location of the country. we are within 60% of america and one very long day's drive. >> the energy story is so great. new york governor quomo still is on the fence regarding the fracking issue. it could revolutionize his state. how important to your economy and pennsylvania is the fracking shale revolution? it is extremely important and we put an impact fee on the shale. we picked up $204 million rather than put taxes whose impact fee into the community. it has allowed the industry itself to hire people. there are related companiy ies t hire people. and you know the phrase the

necessity is the mother of invention. a lot of inventions are being developed but the energy itself allows businesses across the state to grow. a lot of companies in south eastern pennsylvania and philadelphia are going to be using it to power the refineries, it is looking and hopefully will build a facility that will take the ethonol and take ethanes they are paying around $80,000. the average workforce is $47,000. >> why is the governor still waiting? >> i know what is going on. i know there are a number of people that used to be opposed to it. a lot of them have changed here. but there are a certain group

that are opposed to it. but i remind many people we follow it closely and it is a technology that has been used in texas and we feel comfortable that it is flowing the economy here in pennsylvania and it is going to make us and the united states in the long-term energy independent from the mid east. let me ask you two quickies. number one, does all of this washington stuff affect pennsylvania? and how bad is that going to affect pennsylvania? it is hard to predict. we could lose millions in community block grant funding and in the education department and a number of other areas. so i'm in the process of getting

ready to announce my budge it in the first week of february. we don't know what we are or aren't going to have. i inherited a $4.2 billion deficit. we didn't spend more than what we had. the federal government has to look to spend within their means. >> we are going to leave it there. >> we appreciate it. great story to tell. we have breaking news out of washington now the house is voting to provide aid to victims of super storm sandy. >> the house vote is continuing. we have five minutes left. this $50 billion bill for sandy relief has the votes to pass. 175 nay votes. about 5:00 left in the vote it is not official until they gavel down this vote. earlier today there was an

attempt to offset some of the cost of the spending in this bill bypassing an amendment that could have a spending caught with the federal government. this will not be paid for but it looks like the $50 billion is passing as we speak. >> dow k chris christie will have a nice word to say about speaker boehner? >> he wanted to see this money faster and a lot of the members of the new jersey and new york delegations are upset still with how they feel they were treated here. they failed in that attempt today, larry. >> we have a date and time president obama is going to unveil his proposed gun control measures tomorrow.

what can legal gun owners expect. we have a preview of that coming up. please stay with us. ♪ if loving you is wrong ♪ i don't wanna be right [ record scratch ] what?! it's not bad for you. it just tastes that way. [ female announcer ] honey nut cheerios cereal -- heart-healthy, whole grain oats. you can't go wrong loving it.

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get started at legalzoom.com today. and now you're protected. get started at legalzoom.com today. excuse me, sir i'm gonna have to ask you to power down your little word game. i think your friends will understand. oh no, it's actually my geico app...see? ...i just uh paid my bill. did you really? from the plane? yeah, i can manage my policy, get roadside assistance, pretty much access geico 24/7. sounds a little too good to be true sir. i'll believe that when pigs fly. ok, did she seriously just say that? geico. just click away with our free mobile app. tomorrow just before noon. president obama will unveil his gun control plans to the nation. thank you aman. >> reporter: tomorrow at an event at the white house the

president and the vice president are going to join together to announce their proposals and they are going to do it with children expressing concern about the shooting in connecticut. jay carney cautioned r eed repo not to cauti not to assume what is in there. >> i would caution you not to assume what is in there based on an earlier stage of the process. the president will announce the plan that is the president's plan and he will do that tomorrow. >> we can speculate what is going to be in there based on what the president has talked about. including on monday he talked about universal background

checks. and a call for a new assault weapons ban. whether or not the president is going to call for executive order. it is unclear whether there will be an executive order component tomorrow. they are going to do the big reveal plan here tomorrow. that is going to require legislation. we had that in 2004. >> it passed in the 1990s and expired an the president said there are not the votes for the weapons ban. the nra active here against the ideas and the president said he was disappointed and that they were talked past one another. >> we go to the lance armstrong

scandal. we are talking tens of millions of dollars and he may face possible jail time too. after the break, this is a scene that breaks conservative's hearts but what do they need to do to turn this trend around. former senator and into hertage foundation chief jim demint here tonight. >> tomorrow earning central looks for first word on how the numbers will impact the trading day. tomorrow on cnbc. ♪ [ watch ticking ] [ engine revs ] come in. ♪ got the coffee. that was fast. we're outta here.

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after more than a decade of denials. lance armstrong is reportedly coming clean during a taped interview with oprah that is set to air tomorrow. good evening. >> good evening larry, it will be interesting to see how much lance armstrong says in this interview with oprah. his advisers and lawyers all split over this but he apparently made the decision to

sit down with the talkshow star. this could be costly for him. he could be forced to pay some of those sponsors back. he said under oath that he had never taken performance enhancing drugs. this could be the beginning of a what has played out many times. >> how bad is this going to be? >> here now we have sports illustrated senior writer. andrew, beginning with you, everything i read, he is in a heap of trouble. he is in legal trouble and in

criminal trouble and financial trouble. >> there is a good chance he could end up exchanging a yellow jersey for an orange jump suit. he has taken that $30 million from the us post office. when you do that, you can face real problems when you do that. he is in serious legal trouble. >> apparently he had very arrogant meetings with the u.s. and world anti-doping organizations. this guy said it will take you 8 years and he said i'm going to decide my redemption.

>> forget the organizations. he has had arrogant meetings with the world for a decade now. he has denied it and attacked anyone who told the truth about him in the public and the courts. this is what he did to everyone else. he deserves it right now. >> do you think he is going to get back into sports. do you think that is remotely possible? >> not competitively in a meaningful way. first he is in his 40s and he is past the point that it is going to matter. and he never would have won the tour de france anyway. it was built on a fraud. i don't see how anybody can see him the same way down. >> on the issue of sponsors, he

sued sponsored who accused him of doping and sued them in some cased they payed him money. he may have to pay the money back the sponsors put up to sponsor him. >> it is possible. there is that morality clause in it. and he has very, big sponsored who paid him a hot of money. companies like n eaike and suedm an insurance company who refused to pay him his 7th tour de france. they said wait a minute you swore and affirmed in a deposition and now you have admitted it. it is a dumb dumb thing that he did. maybe he had this come to jesus moment but that is going to cost him a big chunk in his net

worth. >> what i hear is come to his moment. >> thank you very much. you can catch michael's column on lance armstrong tomorrow on sportsillustrated.com. >> all right. shifting gears my next guest is moving to the heritage foundation. here now, is jim demint. i'm going to refer to you as senator deminute. thank you for coming back on the show. it looks to me like the republican party has fallen on hard times. they lost the last election. how dan they get the white house back and the u.s. senate back. i'm going to talk about

conservative principles. what we need to do. is take this to the american people and showcase successes all over our country. you have 25 states now that are doing thing that is are working for their citizens. states like michigan that are passing freedom to work. we see conservative principles worki ining everywhere and we w to do everything that we can to bring that to light. i think that is the only way we are going to win more national elections if people see that these ideas are working. where do you think the republican party lost out on conservative principles. what do they miss and what are you going to advocate at heritage? >> in 2010, you see the conservative grass roots a

activists got involved. they retook the house and it had little to do with the republican party and it had everything to do with the grass roots activists speaking out. in 2012 it was the republican election and the grass roots were gone. they weren't embraced by the establishment. they were from outside groups and they weren't advocating conservative ideas. we were told we needed to make obama the issue in the last election. we needed to make bold conservative ideas. >> two of your proteges in the senate are arguing and i can it is to conservatives that the gop

has to be more inclusive and tolller rerant to the administr. >> that is not a change for conservatives. we welcome imfrags. a lot of us have worked on expanding our visa programs. allowing students who graduate to stay. there are a lot of things that we have been working on. not just one that simply rewards people that come here and ignore those that have been waiting in lines to come. there is no group that is more pro group. but this idea of granting amnesty and voting rights is not

an idea that is going to fix the problem. collin powell still regards himself as a republican. over the weekend, he said the republican party has areas of intolerance. is that true? might the same thing be said of conservatives? >> it is not true at all. i have been a conservative a long time. >> i have been all over the country working with groups and i have not seen any evidence of intolerance. when we have a conservative african-american step up to run like tim scott. odds are he is going to win. we appreciate that kind of diversity in our party. when you see them running, you see the republican party welcome them. so what we are looking for is

not people for tokenism, we want people from all walked of life. i would be remiss if i didn't mention that the big issue in front of us now is our debt. and the debt ceiling is an alarm bell going off telling us we need to cut spending. i'm hopeful that the parties can come together and agree to balancing our budget. i think it is a common sense idea. >> you know, somebody once said that free market capitalism is the best path to prosperity. >> i don't know why general colin powell ignored that. >> all the best on your new position. >> we go to the markets.

the dow is up for the 5th day in a row. we are going to talk about that. and look at interesting economic news ahead that could be rather bullish. officeyour business needs...k... at prices that keep you...out of the red. this week get a bonus $15 itunes gift card with any qualifying $75 ink purchase. find thousands of big deals now... at officemax. ♪ [ male announcer ] some day, your life will flash before your eyes. make it worth watching. introducing the 2013 lexus ls. an entirely new pursuit.

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now let's do some stock market work. apple is still under fire for weak numbers. it tumbled today. dell is over $13 a share. the overall s&p hit a fire year high. up 15%. the last two months and it is up 6% that is a bullish independent cater. good retail sales report today. let's talk with ken with capital growth. i sthout tthought the retail sa number website as up. things are looking better than was first thought. there was a major upturn in automobile sales. and it has happened in the last couple of weeks.

isi data which i have been received for the hast few years. is probably associateded with the fears of the fiscal cliff. driving it is building up people's kstsz about the fuconf in their own net worth. >> how about the stock market itself? >> that is a wealth cray toreat. >> confidence in the future is building. i think you are going to see economic growth. and it is going to cause the fed to change it's policy. short-term interest rates are going to go up as well. you are going to see many stocks which will be enhanced if interest rates move up.

>> what would some of those groups be if you are correct, that benefit from it. >> life insurance companies and all of the banks and the big money center banks and those would benefit the most. >> their valuations would enjoy with higher interest rates. wouldn't your other pro growth stocks, energy, wouldn't that stuff go up too? >> it is a growth signal. it would. the area that people have been down on is united states domestic consumer driven stocks. the consumer has beeen believed to be impaired. even though production is up from where it was. we are increasing the age of the fleet. we have supply in housing and

automobiles. and it is there because the consumer has been fearful. they are going to revert to more spending patterns in these areas. thank you very much. >> chuck schumer angers some of this supporters by coming out in favor of appointment. next up. um... try the number one! yeah, this is pretty good. [ male announcer ] over a third of a day's fiber. fiber one. office superstore ink retailer in america. now get $6 back in staples rewards for every ink cartridge you recycle when you spend $50 on hp ink. staples. that was easy.

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all right breaking news, another sdipt involving boeing 787 dreamliner. be bertha cooms. >> reporter: this one in japan they had to make an emergency landing in western japan. there was smoke seen in the cockpit. all 129 passengers and 8 crew members were evacuated safely. this comes in recent weeks as we have seen problems with the airline. but in this case, an emergency landing when an all napon air 787 suffered some smoke in the

cook pick. >> now we switch gears really a cheap date. after a 90 minute meeting, president obama's beconed call, let's go to john bachelor of the john bachelor show. please, i beg your pardon. we are going to be short. this is an issue the jewish lobby. he is not a senator from israel. why is chuck schumer saying that things are going to be okay. i'm talking that he has been making long phone calls writing letters to senator boxer. what we are seeing now is a

death bed confession who in the past will be more correct in speaking with our allies. >> haegel mispoke about the nuclear threat from iran. i guess chuck schumer is too a death threat? >> haegel's supporters support him because of the principle. he wanted to talk to iran and so forth and who knows where he is going to stand should he become defense secretary. how can you trust this guy haegle? >> you cannot. he represents the obama administration's foreign policy. he is handing off the cut backs to a former member of the

military. i do not expect him to be part of the foreign policy. it will be closely held as it was in the first administration. he is a big defense cutter. maybe that is ironic he is a dedicated vietnam vet. it is going to slash the defense department more. >> the question is whether you are going to trim the budget with an axe of scalpel. chuck haeg eext lel can't get i. it takes decades. >> he was opposed to it. >> that may be one reason why he stepped down. i'm told that there is no sorrow. this is frying pan an fire.

i know that chuck haegel a month into this process is likely to be the secretary of defense and the defense department is adjusting accordingly. what did all of this say of chuck schumer. he is such a prominent sjewish leader? how can he flip-flop like this? >> the senators are to judge chuck haegel on his record. it throws the whole process. it does. and i wonder whether it doesn't do more harm than good at the end of the day. results matter. mr. haegle has a very, very poor record with regard to his mouth.

>> with his mouth, i love that. john bachelor, you are both spectacular. i appreciate it. we had a tough time. that is it for this evening's show. thank you for watching. we will pursue much more tomorrow. [ male announcer ] this is not my home.

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